It’s been a quiet year for the SMSF sector, there hasn’t been a lot of regulation or big cases, we’ve had the usual media from the retail funds and the industry funds… we’ve had the FSI report which has left SMSFs alone, which I think are doing fine, so I think it’s been a pretty quiet year as far as the SMSF world is concerned.

What are your thoughts on 2015? Will the sector be subject to further change or regulation?

I think the big thing to look out for is the proposed tax reforms, the papers will be coming out next year and I think that will determine whether there is further regulation of the SMSF sector and whether they take up the FSI’s suggestion to ban loans to SMSFs so I think they’re the big two issues one is the tax stuff that comes out because there’s potential tax reforms for the SMSF sector and whether the government takes up the FSI report’s recommendation to ban loans to SMSFs.

What sort of things are we likely to see from the tax reforms?

The big issue is whether there’ll be caps on some of these tax advantages that high wealth people get, I think that’ll be an issue, so that’s something that will have to be addressed. It was in the FSI report, and lots of people have been putting out there that we need to look at the issue of big tax advantages that high wealth people get.

The other issue that the FSI came out saying was that there should be a consistent tax regime across the accumulation phase and the pension phase - whether the government does anything in relation to that [remains to be seen]. I suspect they won’t, I suspect they’ll leave pensions untaxed and leave the others taxed as they currently are.

Do you think the FSI’s recommendations which relate to SMSFs will be taken into consideration in the May budget?

I think there’ll be a big fight over banning loans in SMSFs, the SMSF sector is quite happy with it. There’ll be a big push from the industry and retail funds to ban loans to SMSFs, it’ll be an interesting year in 2015 between the SMSF sector and the other super sectors.

Is there anything you’re lobbying for in 2015?

We will be lobbying to retain borrowing in super in SMSFs, but our view is that borrowing for an SMSF should be a financial product and covered by the Financial Services Act, we think that’s a better way regulate the issue of loans. A lot of the loans are fine, but we need to make sure that people aren’t getting caught up by property spruikers. So the best way to do that is to make it a financial product and bring in the best interests duty.

I think a ban is extreme, there hasn’t been a sign to say that they’re listing bad loans or that people don’t know what they’re doing. There’s just some concern on the periphery that some of the advice given isn’t the best advice, ASIC is taking action against a property spruiker so it’s one of those things where there is concern but the best way to address it is not through a ban but through regulating it better.

Is there anything else you think might impact the sector in 2015?

Well it depends, a lot of the stuff from last year’s Budget was unexpected, so it really depends if the government does anything unexpected in the budget and how desperate they are to bring it money. So we’re not expecting a lot, other than the tax reform paper coming out and that’s probably later on in the year. But with these things you never know, they seem to sort of spring new ideas out so it’ll be interesting to see if the government does anything in the budget.

If the tax reforms do come through will that have a big impact on the SMSF industry?

I think it will. One of the areas that the FSI has picked up was in relation to franking credits and whether they get rid of franking credits. In the SMSF sector a lot of the investment in securities is because of the franking credit advantage that they get. If they got rid of franking credits then there would be a real change in the SMSF sector, I think the investment decisions could change quite significantly if they got rid of it, if they did there would be a real radical change to the sector.

Would we be likely to see a large draw down in Australian equities if that was to happen?

I think you would see a big change in some of the investments, yes, there would be a sell off of certain stocks, and they would maybe put investments in other areas. The other problem is the most likely areas is cash and cash doesn’t pay very good either, so I don’t think it’ll be a great decision, you might see some people go offshore shares because they might perform better but they don’t get the franking credits so there might be some transition from Australian equities to overseas equities.